CASE STUDY 10 :CHOICE HOTELS INTERNATIONAL

CASE STUDY 10 :CHOICE HOTELS INTERNATIONAL

Within the hospitality industry, there has traditionally been a division

between networks that serve guest functions and those that serve

operations and administration, both with respect to data transmission and

voice transmission. In recent years, most hotel and motel chains have

moved in the direction of consolidating multiple functions on networks that

used to be dedicated to one use. Tighter integration of voice and data and of

guest and operations/administration networking is a fast-growing trend.

Choice Hotels International (www.choice.com) is a good example of this

trend.

Choice Hotels International (NYSE: CHH) is one of the largest and most

successful lodging companies in the world. It franchises more than 6,100

hotels, representing more than 490,000 rooms, in the United States and

more than 30 countries and territories. The company’s best known brands

include Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria

Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and

Rodeway Inn.

In-House Networking Functions Choice supports two distinct networking functions. A central Web site

enables customers to reserve rooms at any Choice franchise

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accommodation. The central reservation system, known as Profit Manager,

automatically finds the most appropriate hotel based on location, price

range, or standard. Individual hotels also take bookings, so there needs to

be a way for hotels and the central system to remain synchronized.

Choice networks also support its franchisees. Choice is in fact a

relatively small company in terms of personnel (about 2000 employees) and

does not own or operate any hotels. All of the establishments under its brand

names are independently owned and pay Choice licensing fees and a royalty

on all sales. In return, they receive a variety of services, including

marketing, quality control, and inventory management. Many of these

services are offered via network, such as allowing managers to order

supplies online and check booking status. This support network is similar to a

corporate intranet but has a higher reliability requirement. The 6100 hotel

managers are, in effect, Choice’s customers, not employees. Thus, the

standards for reliability and performance of the network are high.

In the late 1990s, Choice began to focus on providing a state-of-the-art

global reservation system. At this point, the synchronization of local and

online reservations was done manually. Each hotel provided Choice with a

fixed block of inventory to sell over the central reservation system, with an

average of 30% of capacity. Once that 30% was sold, Profit Manager listed

the hotel as fully booked, even though there might be plenty of rooms

available from the other 70%. The reverse problem also occurred: If the

local reservation system had sold all available rooms except those assigned

to Choice, the local staff had to refuse additional customers or overbook.

Thus, the system was inherently inefficient.

Around this time, Choice moved from a purely telephone-based central

reservation system to a Web-based system. Choice found, as did many

companies, that letting customers serve themselves online saved time and

money. Further, unlike many industries burned in the move to e-commerce,

the travel sector is an ideal match for Web-based services. And the benefits

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for travelers are striking. Customers can get an instant list of every room

available with their chosen criteria. They can also view the hotel and, in

some cases, the individual room. In addition, hotel rooms are a typical

example of “distressed” products; like airline seats and theater tickets, they

can’t be stockpiled if left unsold. Thus, they are ideal for using last-minute

special offers and promotions, which can be posted online or e-mailed to

interested customers.

But all of these benefits require full integration between local

reservation systems and the central reservation system. Choice decided to

implement a franchise-wide IP network that provided every American hotel

with a permanent connection to the central Profit Manager database. The

most important criteria for this network were coverage and reliability. The

network needed to reach every franchise and needed to be highly available.

Capacity was not a particular concern, because updates and reservations use

little capacity.

To meet its needs, Choice decided to go with a satellite network

[HARL02, DORN01, UHLA00]. Even within the United States, reliable

universal coverage requires expensive leased lines or dependence on

switched networks that may not always deliver. The situation is far worse

internationally. Satellite networks provide the universal coverage and are in

fact more reliable than the competition. Satellites that use fixed dishes are a

mature, dependable technology. Downtime averages only minutes each

year.

For its initial effort, Choice went to Hughes Network Systems, which set

up a dedicated IP network using two geostationary satellites based at

separate hubs (Figure C10.1). The hub is a ground-based control center that

includes a number of switches and routers. At the hub, Hughes separates

Choice’s traffic from that of its other customers and routes it accordingly.

The Los Angeles hub covers the entire United States via a broad-beam

satellite service. The Germantown hub controls a number of narrower spot

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beams that service Alaska and Hawaii and provides extra capacity for major

cities. Each hotel is equipped with a VSAT (very small aperture terminal)

dish.

The satellite system has worked well, and Choice has gradually

transitioned operational and administrative functions to the network. For

example, data for settling accounts with travel agents and tracking the

Choice Privilege frequent-stayer program are sent on the satellite network.

Guest Internet Access In 2004, Choice began implementing free high-speed Internet access for all

guests in its Clarion Hotels and Comfort Suites, using 3Com equipment. The

implementation uses an efficient combination of wireless and wired access

within each hotel [3COM04, 3COM06].

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To be able to affordably provide Internet service, hotels have

traditionally invested in expensive and disruptive construction, including the

installation of additional cabling and forcing the closing of income-producing

rooms. To recover their costs, some hotels charge their guests for Internet

access – which is exactly the situation Choice Hotels wished to avoid. To

allow its franchises to affordably fulfill its mandate, Choice Hotels needed a

powerful, low-cost network solution that could be installed quickly and easily.

Access is provided in wireless and wired modes. For wireless access,

each hotel implements Wi-Fi that serves all guest rooms. Using the 3Com

Wi-Fi network, guests are able to check e-mail, exchange files, and browse

the Web at speeds up to 54 Mbps. Built-in encryption and support for

multiple security options help safeguard data as they travel over the wireless

network. With each access point supporting up to 256 users, setting up

conference room connectivity requires no additional wiring or IT assistance

to provide ample bandwidth even to large groups.

Users without wireless capabilities can plug their laptops into 3Com

wireless LAN workgroup bridges in guest rooms and hotel data centers for

immediate connectivity.

Free-to-Guest Television Services In 2011, Choice International selected Bulk TV & Internet (www.bulktv.com )

as its television services provider for franchise hotel owners of the

company’s 11 brands [PRNE11]. Bulk TV, headquartered in Raleigh, NC

provides satellite TV, Internet services, and bulk TV (Television plus Internet

services). The company serves hotels, nursing homes, hospitals, correctional

facilities, fitness centers, and the collegiate housing market. In addition to

television programming, the company offers high-speed Internet access,

virus control, bandwidth throttling, VPN support, managed data services,

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Bulk TV & Internet is the leading provider of DIRECTV services to the

hospitality industry. DIRECTV is one of the largest satellite television service

providers in the United States; the Dish Network is its major competitor.

Choice International’s long-standing use of VSAT’s and satellite-based

communication services contributed toward their choice of Bulk TV &

Internet for free-to-guest in room television programming. The wide range

of HD programming, a la carte programming, 4/7 technical support,

competitive monthly rates were also attractive features.

Bulk TV & Internet custom builds and installs each of its customers’

systems and uses several enterprise-grade solutions, including fiber, T1,

DS3 and carrier Ethernet to satisfy their Internet needs. Most of the

systems that they build include remote monitoring capabilities that will notify

the Tech Support Department at Bulk TV & Internet about connectivity

issues before guests or residents are aware of any problems.

Discussion Points 1. Perhaps the major drawback to a satellite-based system is latency. The

delays can be noticeable on some online applications. Discuss what issues this might raise for the Choice suite of applications.

2. What issues is Choice likely to experience as it expands its network to

full global reach?

3. Do some Internet research to identify the reasons why providers like Bulk TV & Internet use terrestrial circuits rather than satellite links to support Internet access for their customers. Why are terrestrial connections preferred?

Sources [3COM04] 3COM Corp. Choice Hotels International Teams Up with 3COM to Offer Free Wireless Internet Access at Clarion Hotels and Comfort Suites. 3COM Press Release, February 18, 2004. http://www.3com.com/

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[3COM06] 3COM Corp. Case Study. Choice Hotels International, Inc. U.S. 2006. http://www.3com.com/. [DORN01] Dornan, A. “Hotel Chain Reserves Room on Space Network.” Network Magazine, January, 2001. [HARL02] Harler, C. “Bring it On!” Hospitality Technology Magazine, January/February 2002. [PRNE11 PRNewswire.com. “Bulk TV Awarded Qualified Vendor Status with Choice Hotels International. October 27, 2011. Retrieved online from: http://www.prnewswire.com/news-releases/bulk-tv-awarded- qualified-vendor-status-with-choice-hotels-international- 132689763.html. [UHLA00] Uhland, V. “The Turbo-Charged Enterprise.” Satellite Broadband, November 2001.

  • CASE STUDY 10
    • In-House Networking Functions
    • Guest Internet Access
    • Free-to-Guest Television Services
    • Discussion Points
    • Sources

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